Crunch time in Congress could hit state and local programs

Route Fifty’s Capitol Hill correspondent, Kery Murakami, has been keeping a close eye on the many state and local issues that could come to a head this month. He breaks them down in a conversation with Dan Vock, who covers transportation and infrastructure for Route Fifty.

So, Kery, the House is coming back to town this week after a long break, and the Senate started back up last week. Congress has a lot on its plate this month. Can you tell me about some of the big deadlines coming up that would affect state and local governments?

It’s going to be a busy month, Dan, because the federal fiscal year ends on Sept. 30. The main thing people are watching is whether Congress reaches a budget deal by the 30th to prevent a government shutdown. There’s talk of a short-term deal to keep the government running until they can come to a larger agreement later in the year. But it's unclear whether conservatives in the House are willing to go along unless they get assurances that they will get the spending cuts  they want.

The details of any budget deal they strike will obviously be important. States are watching, in particular, to see whether crucial programs are preserved at about the same funding levels as last year, or whether House Republicans are going to be able to push through much deeper cuts for the coming year.

The other thing that’s going on this month is that some federal programs will end unless Congress reauthorizes them. 

The big one this year is the farm bill. That includes major subsidies for agricultural products, but it is actually a massive piece of legislation that covers everything from SNAP (or food stamps) to potentially preempting state laws on treatment of animals. 

Congress is also supposed to reauthorize the national flood insurance program. As I reported earlier, city and county officials are trying to avoid major spikes in consumer rates that are set to go into effect. And the Federal Aviation Administration also needs to be renewed. Consumer groups and state attorneys general are hoping to see some customer-service improvements  required of airlines, and cities are always interested in how airports fare under those laws.

Then—and sorry for going on and on—separate from all that, the Biden administration and Senate leaders from both parties are talking about adding to this year’s budget with supplemental funding. That would include aid for Ukraine, but also funding for the Federal Emergency Management Agency, or FEMA, to cover disasters in Maui and elsewhere. As I reported earlier, it could also include more money for WIC, the food assistance program for low-income moms, pregnant women and their kids. The number of women on WIC is growing more than expected and was funded for. States running out of money might have to start turning women and their kids away if more funding isn’t approved.

That is certainly a lot. But there are also some tricky politics that lawmakers have to negotiate in order to reach deals on these issues. Can you explain that a little?

President Joe Biden and House Speaker Kevin McCarthy reached an agreement earlier this year to avert defaulting on the nation’s debt. That deal called for essentially keeping spending at current levels next year. But now many conservative members of McCarthy’s Republican caucus want to cut spending even further. Some say they’re OK with a shutdown unless they get those cuts.

There are many programs affecting state and local governments that House Republicans would like to cut. Those include funding for water, housing, transportation and climate mitigation.

It’s unclear what Senate Democrats and House Republicans will agree to, but the appropriations committee has passed several bipartisan budget bills already. The full Senate is likely to pass a bill reauthorizing transportation, housing and urban development programs next week.

State and local governments are hoping Congress will keep spending the same rather than agree to cuts. For example, the House’s proposal would cut funding for water infrastructure to 5% of current levels. This does not include the separate tens of billions of dollars states are getting for water from the infrastructure act. But what I’m being told is states say they need more and would be upset about getting less.

Let’s talk about a federal government shutdown. What would that mean for states and localities?

The longer a shutdown goes on, the bigger impact it will have on states, cities and counties. They all depend a great deal on federal funds, but the specific details of what money might get delayed or how many federal employees might be furloughed in each area would depend on what Congress is or is not able to agree on before the deadline comes.

Will the last-minute negotiations benefit some states over others?

There are all sorts of wonky details in budget negotiations. I have a story coming out next week, for instance, about the way both the House and Senate would pay for earmarks. Under the proposals, that money would come out of states’ water funding. That’s good for states like Maine, where their senators are getting enough in earmarks to make up for the loss in water funds. But there are 34 states where the budget proposals do not include enough earmarks to make up for the reduction in state funding. Texas could lose a net $40 million. So basically, most states are losing funding, because their money is being shipped off to pay for earmark projects in other states.

We just saw devastating fires in Maui, widespread flooding in Vermont and a hurricane that just hit Florida and other Southern states. Are the recovery efforts for any of those disasters in jeopardy because of the dwindling disaster response funds?

The Biden administration first asked for $12 billion to shore up the Disaster Relief Fund at the FEMA. But it has since increased that request to $16 billion.

Many state and local organizations are pushing Congress to approve that extra funding. Groups like the National Conference of State Legislatures, the National League of Cities, the Council of State Governments and the U.S. Conference of Mayors sent a letter a couple of weeks ago in support.

They said that without the new money, recovery projects would “grind to a halt” and FEMA would “implement punitive measures” that would stifle response efforts. “Funding the DRF will ensure that Hawaii and Louisiana will be able to continue their response and immediate recovery from devastating wildfires, that California can move ahead with recovery from the first West Coast hurricane since 1939 and that southeast and mid-Atlantic states will have the resources and support necessary for the latter, and typically busiest, part of hurricane season,” they wrote.

Pandemic-era assistance for water bills for low-income customers is expiring at the end of the month. What would that mean for residents if that aid comes to an end? Is there much appetite on Capitol Hill for extending that help?

That’s another one of those programs that ends Sept. 30. I’m still doing some reporting, but a bad sign for the program is that neither the House nor the Senate’s budget proposals would keep it going. I don’t think that water districts will shut people’s water off, but they might raise rates for others or cut back on other projects they’re doing to keep subsidizing the rates for some people.

Our colleague Molly Bolan has written about the potential implications for child care providers if the aid for them lapses at the end of this month. Is there likely to be any relief for them? Are individual states trying to cushion that blow?

Yeah, Molly wrote about a study that said American Rescue Plan Act  funding during the pandemic to states to aid child care centers will end on Sept. 30. A report by the Century Foundation said that, without the assistance, more than half of the child care centers in Arkansas, Montana, Utah, Virginia, Washington, D.C., and West Virginia would go out of business. Biden said it’s an issue that needs to be addressed but didn’t include it in his supplemental spending proposal. The problem is that Democrats already agreed to keep spending the same. They’re facing House Republicans trying to lower spending. So it will be hard to actually increase spending, but you never know what they’ll agree to.